Fresh & Easy to be sold, will close dozens of stores

The British owner of Fresh & Easy is selling the money-losing grocery chain to American investment firm Yucaipa Companies LLC, leading to the closure of dozens of stores. The location on Hawthorne Blvd. in Torrance is one of the stores that will remain open. Store manager Mondo White organizes the "to go" items which are prepared meals that just need to be cooked; a specialty of the chain.
Tuesday, September 10, 2013, Torrance, CA.
Photo by Steve McCrank / Daily Breeze

The British owner of Fresh & Easy is selling the money-losing grocery chain to American investment firm Yucaipa Companies LLC, leading to the closure of dozens of stores. The location on Hawthorne Blvd. in Torrance is one of the stores that will remain open.
Tuesday, September 10, 2013, Torrance, CA.
Photo by Steve McCrank / Daily Breeze

The British owner of Fresh & Easy is selling the money-losing grocery chain to Los Angeles investment firm Yucaipa Cos. LLC, which will lead to the closure of dozens of stores.

Terms of the agreement were not disclosed.

The deal, announced Tuesday and expected to close within three months, will keep more than 150 of the chain’s 200 stores open. The remaining stores will close in coming weeks, according to Tesco PLC, which launched El Segundo-based Fresh & Easy in November 2007.

In the meantime, it will be “business as usual” at most of El Segundo-based Fresh & Easy locations in California, Arizona and Nevada, the Yucaipa Cos. said in a statement.

More than 4,000 Fresh & Easy employees will be transferred to the new business, although the company currently employs more than 5,000 people. About 400 employees will lose their jobs, according to Fresh & Easy spokesman Brendan Wonnacott.

The grocery chain will not disclose which stores will close until affected employees are notified, Wonnacott said. About 160 people work at the grocer’s El Segundo headquarters.

The chain, which never was never profitable, offers fresh fruit and vegetables and a wide range of prepared meals in small stores that are typically the size of a Trader Joe’s. Fresh & Easy stores had almost exclusively self-checkout terminals, reducing the need for employees.

Linda Knapp stopped by a Fresh & Easy in Torrance on Tuesday to buy salad mix and a deli container of tomato mozzarella pasta.

“I hope that this one stays open and that they don’t make a lot of changes. I like it the way it is,” said Knapp, 67, who works as an office manager in Torrance. “I love this store. It’s convenient and I love all the fresh vegetables and all the little stuff they have prepared.”

The transaction announced Tuesday also includes Fresh & Easy’s Riverside distribution and production facilities, where prepared meals are made, processed and sent out in trucks to the entire chain.

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“The decision we are announcing today represents the best outcome for Tesco shareholders and Fresh & Easy’s stakeholders,” Tesco CEO Philip Clarke said in a statement. “It offers us an orderly and efficient exit from the U.S. market, while protecting the jobs of more than 4,000 colleagues at Fresh & Easy.”

Yucaipa Cos. was founded in 1986 by Ron Burkle, who serves as managing partner. Burkle has served as chairman and controlling shareholder of several companies, including Ralphs and Food4Less supermarket chains.

In a statement, Burkle said: “Its dedicated employees and great base of customers give us a solid starting point to complete Tesco’s vision with some changes that we think will make it even more relevant to today’s consumer.

“We plan on continuing to build Fresh & Easy into a ‘next-generation convenience retail experience,’ providing busy consumers with more local and healthy access for their daily needs.”

Fresh & Easy was hampered by various dynamics in the U.S. grocery market, including a crowded and cutthroat industry in which giant retailers such as Wal-Mart undercut traditional grocers.

In addition, Fresh & Easy has been the focus of a labor-led boycott. Fresh & Easy is nonunion and its management refused to meet with labor leaders to discuss unionization efforts.

However, Burkle, a prominent donor to Democratic candidates and close friend of former President Bill Clinton, has had a good relationship with labor groups. For example, Burkle received the AFL-CIO’s Murray Green Meany Kirkland Community Service Award and the Los Angeles County Federation of Labor Man of the Year Award.

It is unclear how Burkle’s political affiliations will affect Fresh & Easy’s status as a nonunion company.